On The Private Equity "Don't Bid On My Deals; I Won't Bid On Yours" Collusion

With 'private equity' discussions sliding for one moment off the front pages, NYTimes' DealBook notes that it appears these 'honorable' job-creating entities were allegedly colluding to drive down the prices of more than two dozen takeovers. During the last decade's buyout boom, according to newly released e-mails in a civil lawsuit accusing them of collusion, the two firms appeared to be on much cozier terms.

In September 2006, for instance, Blackstone and K.K.R. were both circling the technology giant Freescale Semiconductor. After a Blackstone group outbid a K.K.R. consortium to buy Freescale for nearly $18 billion, Hamilton E. James, the president of Blackstone, e-mailed his colleagues about Henry Kravis, the billionaire co-founder of Blackstone's rival:

"Henry Kravis just called to say congratulations and that they were standing down because he had told me before they would not jump a signed deal of ours,"

Mr. James wrote, two days later, in an e-mail to Mr. Kravis's cousin and co-founder, George R. Roberts. "We would much rather work with you guys than against you,"

Mr. James wrote. "Together we can be unstoppable but in opposition we can cost each other a lot of money."...

"Agreed," responded Mr. Roberts.

The e-mails are part of a court filing Wednesday in an antitrust civil lawsuit brought against 11 of the world's largest private equity firms that accuses them of colluding to drive down the prices of more than two dozen takeovers of publicly traded companies.

A judge ordered the private equity defendants to file an unsealed version of the court papers: "These e-mails are strong signals of anticompetitive behavior,"..."It is always highly problematic when you have such freewheeling discussions between competitors."...

As purchase prices reached into the tens of billions of dollars, the firms pooled their money together to make the acquisitions. The private equity industry has said that the consortiums, or club deals, allowed the firms to spread the risk of owning such a large company. In addition, the firms said that by working together they could bring complementary skills in operating the companies once they acquired them.

While the private equity firms characterized the period from 2003 to 2007 as a time of big deal-making and collaboration, the Massachusetts lawsuit contends that something far more sinister was at work... Calling the period "the conspiratorial era," the lawsuit depicts a secret pact between the firms that divided up the big deals among themselves and artificially - and illegally - kept their prices low. There was a "you don't bid on my deal, I won't bid on yours" understanding between the firms, according to the lawsuit.

K.K.R. expressly asked its competitors to "step down on HCA" and not bid on the company, according to an e-mail that was unsealed and written by Daniel Akerson, then a partner at Carlyle and now the chief executive of General Motors. Two colleagues at the private equity firm TPG e-mailed each other about the firm's reasons for deciding to not compete for HCA, according to the lawsuit...

"All we can do is do [u]nto others as we want them to do unto us," Jonathan Coslet, a TPG executive, wrote. "It will pay off in the long run even though it feels bad in the short run."...

Mr. Bush, the University of Houston antitrust law professor, said that such an exchange between the TPG executives should raise eyebrows among government antitrust regulators as classic anticompetitive conduct.

"This sounds like mutual back-scratching," said Mr. Bush. "I'll scratch your back by not bidding on this deal, and you'll scratch mine by not bidding on the next."

A little bid rigging between two companies. What does being cronies have to do with their behavior? And what do you care -- aren't you against regulations such as those that would make this kind of conduct improper?

Just admit you are an ideologue. So much so that you blame cronyism for the price fixing of private individuals (the fact that they work for corporate entities has nothing to do with the behavior) with no governmental role whatsoever. So much so that you don't even realize that the entire article is about behavior which is only improper or illegal because of government regulations that you want to do away with. But carry on with your "I'm rubber you're glue" bullshit if it makes you feel better.

I never said I didn't have an ideaology, I freely admit it and it can be seen in everything I say or have ever said. You, on the other hand, cannot bring yourself to the realization that your trust in government AS THE benevolent benefactor and arbiter to all society is misplaced.

That is a failed ideologue isn't it?

It can spend a quadrillion on unworkable "solutions" to "percieved" issues which benefit only elites financially and you will say that is the price of civilization and paving over grass.

You are a moron.

You will sit by and say nothing about open bid rigging on the bridges & roads built by government contractors because they "serve a public purpose". You will stand there like an idiot and let college kids go into insurmountable debt and say its an "ïnvestment" for their future. Let someone say XYZ Corp is a known O'Barry bundler and you howl they are an anarchist bent on eating little fluffy puppy dogs and poor children.

Maybe you don't remember the first time we interacted but I do. I took you down through the ten planks of the communist manifesto and you agreed with every one of them...I just didn't tell you till the end...it was those ten planks...lol.

Anyone can do it to you to this day still...unless you start lying, which will be easy to spot ;-)

nmewn, Sock Puppet Here disguised as Cliff Claven. Looks like the Tylers banned my sock puppet avatar. I guess this place is run by pansies now. Not like the old fight club. Must be under new corporate ownership.

I have been reading this site since its inception. I am on my fourth avatar now. You know, a little too much to drink or I forget the meds and I say all sorts of stupid shit. Nice thing about the interwebs is there is always reincarnation going on.

The last century? Or the last last century? Because there weren't too many successful corruption cases brought in the 1900's except for the patently obvious stuff. If you read about it in the papers it had gotten so bad a blind man could see it. Then a few cases were brought to court allowing the rest of the cockroaches to scurry for cover.

I grew up in a small town heavily populated with "da boys". There was always some anger and even jealousy of the racket corporations and government had going. That official collusion (corruption really) was often used to justify da boys own actions. I suspect that worked in reverse as well.

Tyler, you missed the point on this one. Bain is the target, even though the AT actions occurred AFTER he left Bain, this will be a breaking story.

"The evidence in the case comes as the private equity firms and their business practices remain a focus of the presidential race. The Republican presidential nominee Mitt Romney founded Bain Capital, which is a defendant in the lawsuit. Mr. Romney has made his Bain tenure a cornerstone of his campaign to demonstrate his leadership and private sector experience. At the same time, President Obama has used Bain to attack Mr. Romney, accusing the firm of firing employees at its acquired companies and sending jobs overseas."

It doesn't matter when Mittens left Bain unless he divested from Bain at the same time.

Obama's campaign has left a lot of meat on the Bain bone untouched. They could go after the Bain connection with Salvadoran death squads or Bain practices with former Soviet asset privatization or even Sensata. It's a wonder that the R's picked such a grotesque candidate with so many liabilities but then you look at the field they had to work with: Gov. Can't remember the third Fed dept he would cut, CEO Uzbekibekibekistan, Gov. vaccines make you instantly retarded, Former Speaker of the House on the moon and Santorum. Was there ever even a question of Obama's reelection in the face of a party that's self immolating before our eyes? Really?

Oh, sorry, it has been pointed out that it is actually Congresswoman vaccines make you instantly retarded. My bad. I'm not from that part of the country, but have flown through MSP and interacted with people there who have apparently gone their entire lives without any kind of vaccinations.

Not so fast. I have been thinking of adding another handle for a while but don't want to start from scratch. Anything thats been registered for say 2 years with a whimsical devil may care attitude? I need to have online battles with myself to up my profile and battling with anyone under 2 years isn't gonna give me the juice I need. I would need to see the posts to see how my "conversations" would play out and forward my agenda. Anything from Paypal to WOW gold. Have Bob get ahold of me if you are out... (/sarc hehe. that was fun)

Also you can have Gunslinger. I don't know if you remember him. He went off the fucking reservation (hope that doesn't offend any Native Americans) then that Ginslinger started impersonating him. I just got tired of using him but he is a useful idot.

so then why doesn't someone else (another corporate) step up and bid? if it's not a good deal then shareholders and mgmt shouldn't approve it. What happened before PE? nothing, M&A was boring and maybe that's how it should be. If PE firms are all grossly lowballing targets so often you'd think the traditional M&A market would step in.

Romney posted income from several of these Bain deals on his tax returns, which is why the dems desperately wanted him to release them. Even though he "left" in 1999, he structured gains for six more years. The Dems are trying to "tie" him anyway, by stating that he profited millions from those deals.

They could care less about the other defendants, only Bain. Others were added only to throw off the appearance that it was a Dem attack on Romney.

What I can't figure out. Aren't these supposed to be the "top talent" of our meritocracy, from the Ivy League and all that. And they can't figure out not to put this shit in emails? If this is the best and brightest, maybe I'd do better on Wall Street then I thought.

That we were peaking into a culture of dishonesty hit home (for me) in the 90's when a black man could no longer be convicted of killing a white woman by a black jury (360 degree flip from the days a white man could not be convicted of killing a black man by a white jury), and there was no shame in a president quibbling over what the meaning of "is" was as to whether the crime of perjury had been committed. Pretty much free for all on the unabashed corruption after that, from lowlevel dishonesty in parsing for spin machines, to blatant rip offs of the public, clients and shareholders.